Introduction
The World Bank Group has recently announced the twin goal for sustainable development, âending poverty and sharing prosperityâ (World Bank 2014). This is inspired by the worldâs success in reaching the Millennium Development Goal (MDG) target of halving the proportion of people living in extreme poverty 5 years ahead of the 2015 deadline. The World Bank (2014, p. 160) reported that, in developing regions as a whole, the proportion of the population living on less than $1.25 a day fell by more than one half from 43 percent in 1990 to 17 percent in 2011. The major contributing factor to global poverty reduction is the rapid economic growth in East Asia, most notably in China. Worldwide in 2011, just over 1 billion people live on $1.25 a day, which is 14.5 percent of the worldâs population (World Bank, 2014, p.2). The new goal is to virtually eliminate extreme poverty by 2030 by reducing the current proportion of poor people from 14.5 percent to 3 percent.
Economic growth for an extended period of time is the main driver of poverty reduction in the developing world (Dollar and Kraay 2002). Countries experiencing higher rates of economic growth are oftentimes observed to reduce poverty much faster than those that grow more slowly. In a cross-country study, Kraay (2004) shows that growth in average income explains 70 percent of the reduction in head count ratio in the short term and as much as 97 percent in the long term. Lopez and Servén (2004) suggest that, for a given level of income inequality, the poorer the country, the more important economic growth is in reducing poverty. The World Bank (1989, 2000, 2014) predicts that in order to eliminate extreme poverty by 2030 (get into the 3 percent target), per capita consumption of every country around the world must grow by 4 percent annually without any change in the distribution of income in each country. This new target needs the strong commitment of each country to reduce poverty. Simultaneously, we must have a clearer understanding of how poverty reduction can be achieved.
High growth rates could be effectively transmitted into poverty reduction if many of the poor receive gains in the expansion process. What is needed is inclusive growth, which is defined as âgrowth coupled with equality of opportunityâ (Zhuang and Ali 2010, p. 9): growth is inclusive if a large segment of the population is able to participate in and benefit from it. Inclusive growth is about enlarging the âeconomic pieâ â raising the pace of growth, creating a level playing field for investment, and increasing productive employment opportunities (Ianchovichina and Lundstrom 2009).
Asia, which is the most economically dynamic region of the world, is believed to be undergoing the process of inclusive growth. Sustained high growth rates in East Asia have been transmitted to a remarkable decline in poverty, enabling this region to attain the MDG target of halving extreme poverty ahead of the deadline and earlier than other regions (United Nations 2014). The main characteristic feature of the Asian growth pattern is that the growth is broad based, inclusive of the large part of the countryâs labor force. Creating jobs for the poor is important for poverty reduction inasmuch as labor is typically the most abundant asset of the poor (Fields 2012; World Bank 2012). Jobs in the more labor-intensive sectors (such as agriculture and informal service sectors and, to a varying extent, in construction, transport, and low-skilled manufacturing) tend to have stronger effects on poverty reduction.
The nature of inclusive growth, however, is not well understood. The major purpose of the present volume is to investigate the three channels â productive employment, higher schooling, and improved infrastructure â through which economic growth in Asia serves as a springboard of poverty reduction in its rural areas, where poverty is most prevalent and persistent. Since jobs are the key elements in making growth inclusive of the poor, we focus on the role of generating productive job opportunities. The novel approach here is to explore dynamic changes in the labor market through the lens of the job choices of women and men and to track changes in household income structure. The poor seldom take a unilateral strategy in fighting poverty, as they dynamically allocate their labor to various economic activities, where labor could be profitably employed (Baulch 2011). We also focus on the improvement of infrastructure, which has a direct impact on household income growth by increasing income from wage work and self-employment activities. It also has an indirect impact, as it stimulates the development of nonfarm sectors that create jobs in rural and urban areas.
While economic growth has been documented as a powerful force in reducing poverty (United Nations 2013; World Bank 1989, 2000, 2014; Zhuang and Ali 2010), the literature remains elusive on how and to what extent women have benefited from the process of inclusive growth. A level playing field would mean that women vis-Ă -vis men are able to have equal access to economic resources (importantly, land and schooling), opportunities in nonfarm wage employment, and political participation, which is consistent with MDG3, âpromote gender equality and empower women.â Among the three dimensions of equality, gender parity in schooling is the closest to being achieved (United Nations 2013). In fact, in more recent years, a clear gender bias that favors girls in tertiary school enrollment has emerged in developing countries (World Bank 2011d).
Globally, there is an increase in the number of wage-earning jobs held by women in the nonfarm sector, although women in developing regions remain more likely than men to work as unpaid family workers or to engage in low-paying jobs in the informal sector (World Bank 2011d). Worldwide, women held a mere one fifth of the proportion of seats in single or lower houses of national parliaments in 2013 (United Nations 2013). Overall, while a clear gender bias that favors men continues to persist in terms of wage employment and parliamentary representation, there have been major developments in this arena, which could be attributed to economic growth and affirmative actions that tend to promote womenâs welfare.
The present study fills the two missing gaps in the literature by (1) exploring how the three channels â productive employment, better education, and good infrastructure â are able to transmit the benefits of economic growth to the poor and (2) tracking the pathways by which growth has narrowed gender disparity in schooling and employment opportunities between women and men in Asia. Economic growth has stimulated the growth of nonfarm labor income from the informal and labor-intensive sectors and remittance income coming from migrants in local towns, cities, and other countries. Importantly, economic growth in Asia has created jobs for a large part of the labor force, even for the marginalized groups, including youth, women, and the unskilled, who are more likely to be poor. Initial sparks of income growth stimulated by modern agricultural technology and early development of the nonfarm sector have enabled rural households to invest equally in the schooling of girls and boys (Otsuka et al. 2009). Investments in the human capital of women consequently served as an important pillar in fostering gender equality in employment opportunities. Detailed case studies of rural households have been conducted in six countries in Asia: Laos, Myanmar, the Philippines, Vietnam, Sri Lanka, and Bangladesh. We have chosen these countries as we know relatively little about the process of inclusive growth in these regions.
